Funding research in the UK sustainably
Stuart Ward
Director, Corporate Services
Engineering and Physical Sciences Research Council
Funding research in the UK sustainably
Topics
• UK University finances
• Reform of dual support
• Efficient and effective use of full economic costs
UK University Sector Income by source
£25,000 million in 2008-09
UK University Sector Income
2002-03 to 2008-09
£5.0 B
Research grants & contracts
£25 B
Total Income
£4.0 B
£20 B
£3.0 B
£15 B
£2.0 B
£10 B
£1.0 B
£5 B
£0 B
£0.0 B
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Univerities Research Income £ billions
Universities total Income £ billions
£30 B
Growth in research income
£1,800M
£1,600M
Income (real terms £M)
£1,400M
£1,200M
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
£1,000M
£800M
£600M
£400M
£200M
£0M
Research
councils
UK-based
UK
UK industry
charities government
Source of income
EU
Non-EU
Other
sources
Diversity in Universities
TRAC Group
A
B
C
D
E
F
G
Dispensation
institutions
UK total
Number
of HEIs
24
26
20
22
22
7
7
Research
income
£M
4,927
1,363
388
220
67
11
29
Total
income
£M
10,786
4,169
2,423
3,928
2,259
371
375
Research/
Total income
%
46%
33%
16%
6%
3%
3%
8%
Average
research
income
£M
205
52
19
10
3
2
4
Average
Total
income
£M
449
160
121
179
103
53
54
32
29
701
4%
1
22
160
7,034
25,011
28%
44
156
University Research in UK
•Funding Councils: Academic Staff, Buildings, Utilities, etc
•Research Funders: Project staff, Equipment, Consumables
Changes in dual support
(April 2006)
• Universities required to use TRAC to determine Full Economic
Cost (fEC) of activities and projects in a robust way
o Universities should understand their costs and be managed on a
sustainable basis
o Price for sustainability
o Adequate re-investment
• Research Councils pay 80% of full economic costs of
research projects
• The government has provided additional funding (approx £500
million per annum) to RCs to maintain the volume of research
• Government departments, industry and other funders should
pay the full cost of projects that they commission
Transparent Review of Academic Costs
•
•
•
•
TRAC was developed by universities to provide retrospective cost
analysis at a high level for accountability and management purposes
based on:
•
•
•
•
•
Materiality
Cost are fair and reasonably stated
Flexibility and choice of methods
Consistency of costing treatment
Auditability (of methods, not data)
Identify as many costs as possible:
•
•
•
•
•
Direct research staff costs
Academic staff time
Materials, equipment etc.
Indirect costs (central services, libraries etc)
Estates and facilities costs including support
Allocate indirect and estate costs on a consistent and robust basis
Add in economic adjustments for maintenance and cost of capital
RCUK Quality Assurance
and Validation of TRAC

Assurance and Validation of TRAC as applied to fEC in HEIs


Undertaken in partnership with Funding Councils
Based on self-assessment by institutions. Lighter touch approach
for less research intensive universities

Acceptance from other public funding bodies inc. EU for
Framework Programme 7

Checks whether the institution meets the TRAC requirements for
fEC and fEC rates for its recovery of costs
OUTCOME
•
Limited assurance
Review by RCUK of the efficient and effective
use full economic costs

Is the deficit on research an artefact or a real concern?

Can we simplify and improve TRAC?

Is the volume of research increasing?

Is the additional money for fEC being used sustainably?

Where is the driver for efficiency in fEC?

What steps can we take to constrain or reduce fEC rates?
TRAC returns – research deficit
Institutionown funded
Postgraduate
research
Research
Councils
Gov't
dep'ts
EU
Income
TRAC full economic costs
Surplus/(deficit) 2008-09
2,031
1,860
171
639
1,161
-522
1,592
2,139
-547
755
1,004
-249
339
559
-220
949
1,534
-586
729
964
-235
7,034
9,221
-2,187
Surplus/(deficit) 2007-08
Surplus/(deficit) 2006-07
Surplus/(deficit) 2005-06
174
162
-378
-305
-583
-229
-203
-647
-238
-188
Detailed breakdown unavailable
-571
-511
-226
-226
-2,015
-1,952
-1,962
£M
UK
Total
Charities Industry Research
Overall deficit
£2 billion
Research deficit by TRAC peer group
TRAC peer group
A
B
C
D
E
F
G
All peer groups
Research deficit (£000s)
Lower
Upper
Average
quartile
quartile
-44,950
-66,208
-27,408
-13,496
-18,797
-7,726
-10,016
-13,776
-5,790
-10,975
-14,415
-6,511
-4,848
-6,219
-3,209
-2,480
-3,442
-1,142
-2,711
-5,568
-972
-15,977
-18,790
-5,157
Research deficit as a % of costs
Lower
Upper
Average
quartile
quartile
-19
-24
-15
-22
-27
-17
-35
-44
-28
-53
-60
-46
-63
-71
-57
-64
-68
-57
-42
-62
-19
-24
-57
-22
Distribution of university indirect cost
2009-10 charge-out rates per FTE
Change in indirect cost rates per FTE
2003-04 to 2007-8
Annual mean fEC rates per FTE for different
peer groups
Principal findings
Is the deficit on research an artefact or a real concern?
•
Deficit remains around £2B despite fEC money from RCs
•
Some of it is probably due to recording of academic time and other factors
•
Some institutions have very high deficits as a proportion of income
•
Require governing bodies in institutions to have a policy for sustainability and
to enforce it
Can we simplify and improve TRAC?
•
Consensus that TRAC needs to be simplified
•
Better accounting for academic staff time
•
Require all institutions to calculate research surplus/deficits robustly
•
Review the technical adjustments in the TRAC calculations to ensure that
TRAC adjusted costs are not overstated
Principal findings
Is the volume of research increasing?
•
No real increase can be seen
•
Research Assistant and postgraduate numbers increasing by ~2-3% pa, but
academic FTEs reducing
•
Little change in the area devoted to research
•
Develop metrics and monitor
• Is the additional money for fEC being used
sustainably?
•
Broadly , yes
•
Evidence of increasing investment in infrastructure and its maintenance
•
Too little attention by senior management and Governing Bodies to trends
•
Institutions should test and use their TRAC data for internal management
purposes
Principal findings
Where is the driver for efficiency in fEC?
•
Lack of evidence of process challenge in universities
•
Variability in rates from one institution to another and from year to year
•
Increases/decreases 2009/10 – 2010/11
•
•
indirect costs: maximum - +151%; minimum - 37%; average - 3.1%
•
estate (lab) costs: maximum - +109%; minimum - 42%; average - 2.8%
Require year-on-year changes to be seen and approved by HEI Finance or
appropriate body as part of TRAC compliance
Principal findings
What steps can we take to constrain or reduce fEC rates?
•
In the current financial climate, funders are concerned that universities are not
taking sufficient steps to improve their cost effectiveness
•
Universities will be required to control indirect cost charge-out rates to inflation
less a 5% efficiency factor (2.5% for those below the mean). Those above the
upper quartile will need to agree faster reductions
•
Apply similar constraints to non-universities
•
Promote greater intensity of utilisation of assets by universities, particularly the
sharing of research equipment and facilities. The Research Councils should
encourage more intensive use of existing assets across the research base